How Ziff Davis Came Back From the Dead By Embracing Ad Tech

It’s the big question in digital media: how to make money amid a sea of competing sites and steadily declining ad prices. Vivek Shah thinks he has the solution.

As head of Ziff Davis, publisher of PCMag.com, Extremetech.com, Geek.com and other sites, Mr. Shah has turned the onetime pioneer of tech media into an ad technology company in the shape of a media outfit, a combination rarely seen in the media world.

Now part of cloud computing firmj2 Global, the Ziff Davis businesses have gone further than typical ad targeting. Its niche: helping advertisers reach people that make decisions about buying products—particularly high end technology products.

In other words, instead of buying ad space on PCMag.com or Extremetech.com aimed at technology enthusiasts, marketers now come to Ziff’s core technology sites specifically to reach people in the market looking to make high-end purchases (like say, servers). Ziff guarantees it can deliver these buyers, either by promising a specific number of actual sales from an ad campaign or guaranteeing a certain number of sales leads, in the form of email signups and the like.

Often these folks are a corporate IT manager looking to spend money on computing equipment for their company.

“We tried to open up layers of moneymaking,” said Vivek Shah, Ziff Davis’ CEO. “Yes, we make money on display ads. But we go well beyond that.”

Eighteen months after being acquired by j2, Mr. Shah can point to robust revenue for Ziff Davis -- $128.5 million in 2013 sales, up 165% from 2012. The growth rate was inflated by last year's acquisition of IGN.com and AskMen.com. And the company is making money.

What exactly did j2 see in Ziff Davis? Well, for one thing, the company didn’t operate like a digital media business. While advertisers using digital media to targeting online shoppers is nothing new, digital media companies typically leave the details to ad tech companies like Criteo or Quantcast. Pure content publishers are less comfortable with selling their audiences as commodities. Many fear they might compromise their journalistic integrity, or even worse, further cheapen their ad rates by letting advertisers slice and dice their audiences at will.

At the heart of Ziff’s approach is Ziff Davis BuyerBase, introduced in 2011. BuyerBase allows advertisers to target an audience interested in shopping for technology on Ziff Davis’ sites and many others, using data culled from Ziff Davis’ sites and others in the technology category.

Under Mr. Shah’s leadership, Ziff has gone out and purchased several advertising and data assets to build out BuyerBase’s capabilities (another step most traditional companies aren’t taking: owning ad tech tools). The company has also built what it refers to as a “data management platform” which is uses to crunch data on its audience and build user profiles for ad targeting purposes.

“We’ve built really what we call a publisher trading desk,” said Mr. Shah. “When publishers are thinking about programmatic advertising, they think about it as liquidation.” Mr. Shah is referring to the growth of programmatic advertising, i.e. the use of software and automated tools for buying and selling ads. In traditional media circles, programmatic is often perceived as a way to unload cheap, unsold ad inventory. “ But they’re thinking about it all wrong,” said Mr. Shah. “This is a fundamental change in digital ads going on. Why shouldn’t I be a leader in that? I have the audiences you want.”

Lewis Broadnax, ‎Executive Director, Web Sales & Marketing at Lenovo, agrees. “We get pitched all the time -- buy [ads on] these sites, that say, ‘we reach 700 million unique users,’ even though there aren’t’ that many people in the country. But Ziff’s audience extension product is legit. It’s bubbled to the top of the list on our budget.”

To be fair, it could be difficult for a mainstream magazine to pull off something similar, since their audiences aren’t nearly as focused on getting information on buying expensive IT products like servers as, say, those reading Ziff’s PCMag.com or Techbargains.com. But Mr. Shah contends that these types of media brands have more valuable audiences than they might realize.

In fact, last year Ziff purchased the content site AskMen, known for movie reviews and pictures of pretty girls, as well as IGN. Ziff Davis is now focused on using data to sell AskMen’s audience to fashion companies marketing sell watches and clothes.

“And with IGN, we help game publishers sell lots of game and we help movie studios buy tickets. It’s a mindset thing,” Mr. Shah said.

j2 Global president Scott Turicchi indicated that the company is looking to push further into media. To date, the Ziff investment has been “all about the return on the capital we deploy,” he said during last week’s earnings call. “Ever since entering the media business, we’ve been able to get in and build scale. Scale equals improves margins, which [the media business] is in fact producing…Our degree of confidence only goes up.”